BI reports Rp 15.1t in new lending

BI reports Rp 15.1t in new lending

JAKARTA (JP): Bank Indonesia said Thursday that new lending
through September reached about Rp 15.1 trillion (US$1.59
billion).

Bank Indonesia director for banking supervision Djoko Sarwono
said that the new lending had been mostly channeled to the
industrial, trade, and consumption sectors.

"We believe that new lending will continue to grow through the
end of the year," Djoko told reporters at a fast-breaking
gathering.

Indonesia's economy has been plagued by stagnant credit since
the country's banking sector began reforms following the economic
crisis.

New lending only started in July at a volume of more than Rp
7.13 trillion.

Djoko said that outstanding bank loans as of end of September
totaled Rp 280.6 trillion, small compared to total third party
funds of Rp 652 trillion.

Many banks have feared to extend new loans due to various
reasons including the high risk associated with the real sector.

But Djoko said that although banks had not channeled their
money into credit, they have managed to make profits.

He said that operational profit jumped to Rp 3.6 trillion in
the third quarter compared to a loss of Rp 8.1 trillion and Rp
500 billion in the second and first quarter, respectively.

He said that the turn around in the banks' profitability was
basically due to the increase in net interest margin from Rp 3.1
trillion in the first quarter to Rp 4.8 trillion in the second
quarter and Rp 6.3 trillion in the third quarter.

Djoko admitted that the rise in the net interest margin was
largely contributed by the huge amount of government bonds in the
bank's portfolio.

The government completed the country's costly bank
recapitalization program in late October by issuing Rp 430.4
trillion worth of bonds to 27 banks including four state-owned
banks and 12 regional development banks. The recapitalization
program boosted the capital adequacy ratio of the banks to more
than 4 percent.

The banks enjoyed interest rate revenue from bonds injected by
the government.

Djoko said that after the recapitalization program, the banks'
capital had jumped from Rp 6 trillion in the second quarter to Rp
31.8 trillion at the end of September.

He said that the level of non-performing loans had gradually
declined to 27.9 percent from 30 percent in the second quarter
and 32.1 percent in the first quarter.

Djoko said that about Rp 54.1 trillion in non-performing loans
(NPL) had been restructured by the banks as of end of September.

All of the bad loans of the recapitalized banks, estimated at
around Rp 260 trillion, have been transferred to the Indonesian
Bank Restructuring Agency (IBRA).

The remaining NPLs held by the banks are those under the
category of doubtful or special mention loans.

Domestic banks are required to have an NPL level of below five
percent and minimum CAR level of 8 percent by the end of 2001.
(rei)